Toyota news offers a Texas-sized lesson

The Toyota news is a Texas-sized thumping that this region can learn from going forward.

Nature landscape with cows(Photo: Enquirer Illustration)

Story Highlights

Texas offers economic develoment lessons.

State has creates 1.18 million jobs in February 2010.

This region is on the right track with REDI, cluster strategy.

Let's call the Toyota news and loss of 1,600 jobs in Erlanger what it really is: A Texas-sized thumping that the region can learn from as our economic development efforts intensify.

Texas is a job-attracting monster: No personal or corporate income taxes. Airports with international service. Aggressive infrastructure investment. (Brent Spence Bridge, anyone?)

By all accounts, Northern Kentucky did nothing to drive Toyota away, and the company and this community share a strong bond.

If Toyota's departure is nobody's fault, it's still everybody's problem, and the lesson is this: When Toyota Motor North America decided to consolidate operations, Texas' ongoing investments paid off with 4,000 new jobs. Its $40 million incentive package was just icing on the cake.

We've made big strides. Site Selection Magazine in March rated the region's 2013 performance, which saw 10,000 new or retained jobs and more than $344 million in new capital investment, as sixth-best in the country.

Since February 2010, the Great Recession's low point for employment, Texas private-sector employers have added 1.18 million jobs, according to an April 2014 U.S. Congressional Joint Economic Committee study. Ohio has added nearly 314,000 jobs during that time, while Kentucky has added 70,400.

"When you look at the numbers, Texas is absolutely kicking butt," said Dan Cunningham, the Long-Stanton Group CEO who recently spent a year at Harvard University studying U.S. and Midwest competitiveness.

"They're aggressive, but they're also doing things to make themselves more competitive."

There will be future opportunities. Toyota isn't the only company looking to consolidate operations, or that has divisions in tax-heavy states like California and Illinois.

We can compete. General Electric recently announced it will build a U.S. Global Operations Center in Southwest Ohio, and those 1,400 to 2,000 jobs aren't the only reason state and local economic development officials are giddy. Texas was also a finalist, and we knocked them out.

JobsOhio, the state's economic development arm, took the lead with General Electric, but it was GE Aviation CEO David Joyce's leadership that closed the deal. What makes the Toyota news so scary is that Texas officials didn't even have to get CEOs and other business leaders involved, according to the Wall Street Journal. That's been a growing strategy here. Texas' quality of life and incentives were enough.

Toyota will move 4,000 people to Plano – including roughly 1,000 currently based in Erlanger – and Texas paid $10,000 for each position through its Texas Enterprise Fund, which is run out of the governor's office.

It's one of the largest incentives per job in the fund's history, according to the Journal, and hardly the only recent example. Last year Chevron – $6,800 per job – and Apple – $5,800 per job – also grew in Texas.

Economic incentives don't always pay off, and cities and states must protect themselves. It's also important to remember that incentives, by themselves, aren't a strategy.

"Businesses make these decisions for strategic reasons," said Matt Davis, interim director of REDI Cincinnati. "The companies are planning to be in these locations longer than the incentive lasts. In most cases, the incentives are an added benefit at the end."

So how do we compete and make our region's economic development efforts systemic?

REDI, the region's economic development arm for business attraction and expansion, is a critical development. REDI, formerly called the Cincinnati USA Partnership for Economic Development, was recently overhauled to give the 15 counties of Southwest Ohio, Northern Kentucky and Southeast Indiana strong voices at the table.

The border can make things complicated – Ohio, Kentucky and Indiana aren't going to share leads with one another. But REDI can expose prospective companies to this region's assets, various business clusters and give them a choice. Ohio might not work; what about Northern Kentucky or Southeast Indiana?

If you think new jobs in those areas don't impact Cincinnati, remember how you felt when you heard the Toyota news.

Collaboration between executives, government and educators – getting the right people to work together – is also key, Cunningham said. Add Jobs­Ohio's cluster strategy, which is leveraging the state's prowess in areas such as advanced manufacturing, financial services and biohealth to attract new business, and you've got a powerful platform for growth.

"You need aggressiveness as a tactic, and that will win some battles, but to win the war you have to take a regional and clustered approach to economic development," Cunningham said. "It takes awhile to get that going. Once you do, you'll get the wins."

Then there is promoting the intangibles, like how we approach our jobs. Doug Moormann, vice president at Development Strategies Group, said one CEO told him that while East Coast workers talk about where they went to college, and Southerners talk about their families, we start conversations by talking about our jobs.

"What that told him is that people in this region care about the job, they care about their work, and that it's an important part of who they are," Moormann said. "He said it was a reassuring characteristic that he saw in people in this region when he thought about hiring."

We got knocked down hard on Monday. As Jim McGraw, CEO of KMK Consulting Co. says, the economic development race never ends.